Canned goods getting caned by high input prices
- The price of baked beans, canned spaghetti and tomatoes are set to soar by as much as 20%.
- A 40% increase in energy prices has meant food manufacturer SPC’s fuel cost is up some $30,000 a month.
- Russia’s invasion of Ukraine has been blamed for the recent spike in petrol prices in which the cost has ballooned to well over $2 a litre.
The price of about 100 household staples at your local supermarket are about to rise as higher fuel costs and inflationary pressures force food manufacturers to pass on growing input costs.
SPC Australia, formerly SPC Ardmona, is raising the prices of its baked beans, spaghetti, and canned tomatoes by between 10-20% as it passes on the biggest cost inflation in memory.
Reports today (March 14) said SPC had no choice but to pass on higher input costs or face the prospect of going out of business.
SPC’s fuel cost is up $30,000 a month, the company said it is facing higher third-party freight and packaging costs including the price of cans.
The Russia-Ukraine conflict has been blamed for the recent spike in petrol prices in which the cost has ballooned from about $1.70 to well over $2 a litre. Households on average are spending a record $257.46 a month on fuel, according to CommSec data.
A 40% increase in global oil prices since the start of the year is smashing households and businesses at the petrol bowser.
Diesel surpassed $2.30 per litre in some parts of Queensland over the weekend, with analysts predicting that the high prices are set to stay.
Fertiliser prices are also rocketing as supply upheaval from Russia’s invasion of Ukraine leaves governments struggling to secure vital crop nutrients, fuelling concerns that record global food inflation is about to accelerate.
Russia is a massive low-cost exporter of every major kind of crop nutrient and the country has urged domestic fertiliser producers to reduce exports with fears mounting of world-wide shortages.
And things could get worse.
Big four bank ANZ believes that inflation could soar as high as 5% over the coming year as Aussies families face higher prices coupled with low wage growth and interest rate hikes.
According to some reports, financial markets are pricing in five interest rate rises this year, with the first rise from the current record low of 0.1% tipped for July.
In the US, inflation is soaring, with the Consumer Price Index rising 7.9% – the highest amount in some 40 years. The prices of petrol, food staples, and houses have jumped sharply, much in line with what Australia is currently experiencing.
Investors are this week preparing for an anticipated US rate rise by the Federal Reserve that will set the tone for volatile financial markets.
Analysts are expecting a 25 basis point hike, noting that the Federal Reserve’s meeting will be scrutinised as investors seek to gain more insight into how the war and resulting commodity price shocks might affect the US central bank’s decision-making.
US producer price data is also due this week and is expected to give money managers clues as to the bread
Meanwhile, global share markets tumbled in trade late last week as Wall Street’s tech-heavy Nasdaq slumped 2.1% and is down 20% since November with the index now in bear market territory.
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